Comments on: What price better credit A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: wcw Wed, 23 Dec 2009 04:51:12 +0000 People specifically want a higher credit score rather than to be in control of their finances because to “the market” scores matter substantially more than anything else. Apply for a job? They’re going to look at FICO first. Apply for a mortgage? Underwriting is dead: FICO first. Security check? FICO first. Ask around; I am not making this up. For pretty much anything that matters these days it’s FICO first, facts last.

So it is not sad that people care about scores first and are willing to jump through whatever hoops Fair Isaac’s model tells them to. That is the rational response to a dysfuncitonal market. What’s sad is that despite clear, uncontroverted failure of Fair Isaac’s models and the victory of logic, facts and old-fashioned underwriting, “the market” still thinks, FICO first.

FD: I have a ‘thin file’ which means that despite a top-decile household income, zero debt and two decades of paying my bills, a college student with no job but a ten-year history of scraping up payments for department-store credit cards has a better FICO than I.

By: jian1312 Tue, 22 Dec 2009 01:48:49 +0000 The way credit agencies calculate credit scores is seriously flawed. For example, a few weeks after I sold my house and parked the equity in my bank account, my credit scored actually dipped under 800.

So someone having $100k+ balance in the bank doesn’t mean anything positive, but paying a mortgage of over $300k is considered a better credit risk. Does that make any sense?

I suppose it does, if you’re in the lending ‘community’ trying to decide if you want to lend money to someone. But credit scores are used in too many other ways now – landlord, potential employers, etc.

Maybe there should be another score that evaluates if someone is financially responsible, preferably based on that person’s balance sheet, not their borrowing history. In other words, if someone has never borrowed money, he should be considered wildly responsible, instead of being punished for not having a credit score!

Also, debt should never be used to finance consumption – such as cars, vacations, electronics, etc. That should be a no-brainer, and should be taught at home economics class at schools. Loans should be limited to things that will generate greater returns, such as college education, professional development, or starting/running a business.

Unfortunately, American style easy credit is now being promoted relentlessly in developing countries such as China and India. The lending industry has happily ruined many lives here, and are now marching toward other countries and laying the ground work there to ruin more people.

By: q_is_too_short Mon, 21 Dec 2009 19:31:12 +0000 They should make credit rating scales work the other way — so that 200 is good credit and 800 is bad credit — so that at least someone with a high score would feel better about it.

By: fix Mon, 21 Dec 2009 18:42:00 +0000 Just a comment on the lending club loan. I am a lending club investor and found that exact loan last week. This type of loans were (I can’t invest at Prosper now due to the SEC crackdown) not uncommon at Prosper but these borrowers usually invest in poorer grade loans so that they can make money. Felix, I am not sure if you have an account there, but this borrower has a 780+ credit score, so when I saw this, I didn’t think boosting credit scores is a major motive. I thought this person was trying to make money but has his/her math backwards, so I sent the question last week, which has yet to be answered publicly.
By the way, the credit ratings at lending club is not based solely on the credit score. It depends on various factors, such as the loan amount taken, inquiries on credit report, credit utilization, etc.

By: MarkWolfinger Mon, 21 Dec 2009 16:38:12 +0000 This is an outrageous credit card.

The fact that it is allowed to be marketed is proof positive (to me) that there is no government agency established to protect the consumer.

Some people need protection against ding very stupid things.